Running a farm is difficult business, and times are changing quickly. It is unfortunate that hard working farmers are subject to swiftly changing consumer demand, and it can be impossible to change supply and business models as quickly as the market changes conditions.
It is important, therefore, that farmers keep tight control of their cash flow and finances. There are many things that farmers can do to make their finances more secure. Sometimes bankruptcy can be a good option for farmers that want to be clear of their existing debts. The following are some best-practice financial tips for farms.
Avoid deferred taxes when possible
The act of deferring tax obligations can seem tempting at the time. However, this can lead to terrible consequences in the future. It means that you may owe much more in the future than you do today. Therefore, it makes better sense to pay off tax obligations as soon as possible if you can.
Don’t ignore accumulating debts
No matter what industry you own a business in, debts can become a reality. What is important not to do, however, is to ignore them, especially if they are accumulating at a rapid rate. It is a sure fire way to tell that something within your business needs to change, fast.
Consider bankruptcy as a solution to debts
There are ways that the government can help you with accumulating debts. Chapter 12 bankruptcy is one potential solution. It is a bankruptcy chapter that was created with farms in mind, and debts can be paid back slowly over time. You should conduct extensive research into whether you think that bankruptcy could be beneficial for your farm. An experienced attorney can provide valuable guidance.
Source: AGFAX, “Farming and Bankruptcy – 9 Lessons You Need to Know,” accessed Jan. 11, 2018